J.B. Pritzker may get substantial payday from Facebook IPO

The expected initial public offering of social media juggernaut Facebook could result in a substantial payday for at least one Chicago investor: local venture capitalist J.B. Pritzker.

Pritzker’s operations were part of a group that purchased $100 million in Facebook shares from company founder Mark Zuckerberg in 2010, said Matt McCall, a Chicago venture capitalist who works with Pritzker and helped evaluate the deal. Zuckerberg used the proceeds to make a $100 million grant to schools in Newark, N.J.

McCall declined to disclose the exact size of the stake or its valuation, saying the information was “rather confidential.”

“But suffice to say it’s a nice multiple,” McCall said.

McCall said Pritzker’s group gained a greater interest in social media companies after New World Ventures, Pritzker’s venture capital firm, invested in Playdom, a social gaming company that he described as “the first real pioneers” to make money from the Facebook platform via the sale of virtual goods. In one case, a new Playdom game garnered 12 million users generating $25 million in revenue within four weeks of launch.

Those kinds of examples showed that the Facebook platform was “so much more viral than any other acquisition channel we’d ever seen,” McCall said. “It really opened our eyes to this becoming what we call the social canvas.”

The belief that other major areas such as music, entertainment and e-commerce would migrate to social platforms led New World Ventures to invest in BeachMint, an e-commerce company with four fashion-oriented sites that have celebrity partners such as Kate Bosworth, the Olsen twins and Rachel Bilson.

McCall said he and his team were able to use hard data from Playdom, which was acquired by Disney in 2010, to create financial models of “what we thought Facebook could be worth near term and long term, and it was staggering.”

According to media reports, Facebook is expected to file its IPO with regulators soon, perhaps as early as Wednesday. The Wall Street Journal reported that the company could raise as much as $10 billion at a valuation between $75 million and $100 billion, resulting in huge windfalls for investors such as Silicon Valley venture capital firm Accel Partners.